What Does a Beneficial Owner of a Company Mean?
The concept of beneficial ownership is critical in corporate governance and legal compliance, particularly in today’s highly regulated business environment. Understanding beneficial ownership of a company helps ensure transparency and accountability, especially in jurisdictions like South Africa, where laws such as the Companies Act govern corporate ownership and control.
A beneficial owner of a company is an individual who:
- Holds ownership of a substantial portion of the company’s shares.
- Exercises significant influence or control over the company’s decisions.
- Benefits financially from the company’s profits or assets, even if their name is not listed as the registered shareholder.
Beneficial ownership is particularly important in cases where the registered shareholder acts as a proxy or intermediary for someone else.
What is Beneficial Ownership in the Business Context?
Beneficial ownership, in a broader sense, refers to the natural person(s) who ultimately control or benefit from a company, trust, or asset. This concept is widely used to:
- Ensure transparency in financial and corporate dealings.
- Prevent illicit activities like money laundering, tax evasion, and fraud.
- Promote accountability in corporate governance.
Globally, regulations mandate the disclosure of beneficial ownership information to curb financial crimes and promote ethical business practices.
What is a Beneficial Owner Under the Companies Act?
Under the Companies Act, a beneficial owner is defined as the individual who ultimately owns or exercises significant influence or control over a company. In many jurisdictions, including South Africa, beneficial ownership is often tied to a threshold percentage of ownership or control, typically 25% or more.
The Companies Act requires companies to maintain a record of their beneficial owners, which must be disclosed to relevant authorities when requested. This transparency ensures compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.
What is a Beneficial Owner of a Company in South Africa?
In South Africa, the concept of beneficial ownership is governed by the Companies Act and reinforced by regulations aimed at promoting transparency and combating financial crime. A beneficial owner of a company in South Africa is typically someone who:
- Directly or indirectly owns a significant percentage (often 25% or more) of the shares or voting rights in the company.
- Has the power to influence or control major decisions of the company.
- Benefits financially from the company’s operations and assets.
South African law requires companies to maintain accurate records of their beneficial owners and disclose this information when necessary. This requirement aligns with international standards to prevent illicit financial activities and promote good governance.
At Burger Huyser Attorneys, we specialise in helping businesses navigate the complexities of beneficial ownership, ensuring adherence and compliance to the Companies Act and safeguarding your business from potential risks.
Contact Burger Huyser Attorneys, and book a consultation.
To speak to one of our experienced attorneys in South Africa for immediate assistance, contact us on the numbers below:
Randburg call 061 516 6878; Roodepoort call 061 516 0091; Sandton call 064 555 3358; Pretoria call 064 548 4838;
Centurion call 061 516 7117; Alberton call 061 515 4699; Bedfordview call 061 536 3223
DISCLAIMER: Information provided in this article does not, and is not intended to constitute legal advice. READ MORE